BUDGET REPORT

9 MARCH 1999

COMPANY CARS

CAR FUEL BENEFITS

As announced last year, the scale charges for free or subsidised fuel are increased by approximately 20%.

Scale rates for 1999/2000 are:

                                Engine size                                Petrol                                Diesel

                                Up to 1400cc                                1,210                                1,540

                                1401-2000 cc                                1,540                                1,540

                                Over 2000 cc                                2,270                                2,270

FIXED PROFIT CAR SCHEME

The rates for the maximum tax free mileage allowances under the FPCS for 1999/2000 are as follows:

                          Up to 1000cc    1001cc to 1500cc   1501cc to 2000cc    Over 2000cc   Alt. average rate
Business mileage
First 4,000  miles           28p                     35p                             45p                     63p                 40p
Over 4,000 miles           17p                     20p                             25p                     36p                 22.5p

PROPOSALS FOR CHANGES

The Chancellor proposes replacing the current system of a standard taxable benefit with discounts for business miles, older cars and second cars, with a system of adjustments to the car's price charged to tax based on the car's rate of carbon dioxide emissions. The Inland Revenue will be undertaking consultation with a view to including legislation in the 2000 Finance Bill.

THE GREEN ALTERNATIVE?

With effect from 6 April 1999, the employee benefits tax is removed from works buses, subsidies to public bus services, bicycles and cycling safety equipment and workplace parking for bicycles and motorcycles.

In addition, tax free mileage allowances for business cycling of 12p per mile will apply. Payments in excess of 12p per mile will be taxable whilst the employee will be able to claim a tax deduction for any shortfall.

For those participating in car sharing arrangements, payment by employees for alternative transport in exceptional circumstances will be tax free.